Archive for September, 2004

I thought might be an interesting exercise to state my views and predictions for what I see as coming in the next 2-3 years. Now the next obvious question is how we can all position ourselves to best take advantage of these possible trends and profit.

I see three dynamic influences having a dramatic effect on our near future and all of them are interdependent.

1.) Internet throughput demands rising exponentially.
2.) Dependence on connectivity becoming crucial.
3.) ILECs and Cable experience serious changes.

1.) I do not believe a 1.5-2Mbps Internet connection to be adequate for the average ISP/WISP in 2-3 years. In fact, if bandwidth usage doesn’t significantly increase, the end result will be an economic loss to some of the more advanced technology enriched countries

I fully expect to see a huge increase in the amount of bandwidth the average users demands as VoIP, VoD, IPTV and video conferencing now become mainstay services. I am predicting that we will see exponential growth in demand from today where 100 users are being satisfied with a T1 connection to requiring 25-45Mbps of throughput for the same 100 customers within three years.

2.) I recently read a study detailing the effect people who are used to high speed connection experience when they are detached from their connection. During this somewhat informal study measurable amounts of anxiety and in some cases elevated levels of depression were observed. No, I do not believe we are becoming the Borg but as the net gets “stickier” (read new, improved and more addicting) I believe that we as a society will become substantially more dependent.

This makes the 100% guaranteed uptime and adequate bandwidth targets we need to shoot for in the long term.

3.) The ILECs and Cable Companies are already having financial difficulty. They have carefully distanced themselves from Licensed Exempt wireless. As they continue to do this, the opportunity to build infrastructure of our own and capture a loyal portion of the market presents itself.

I do not believe the current plan of the ILECs and the Cable Companies can win based on its current timetable and budget. And while I understand that innovation in their world is happening and lowering their costs the use of poles and wires is a very poor idea, prone to mechanical breakdown, accidents and huge maintenance expenses.

The constant expenditure for maintaining their networks coupled with the capital outlay to build new infrastructure needs to be based on the assumption that revenues will increase or at the very least stay flat. I suspect they are also counting on the government to ensure them of increases of their rates unless they can get the controls taken off of them where they could then charge whatever the market would pay.

On the revenue side of the picture, the ILECs, cell providers and the cable companies make money from the following services; Telephone, (including cell phone) Television, PPV, Advanced Data Services and Internet. Some disruptive technologies are creating a crossing over into telephone for the cable companies (VoIP) with VoD, PPV and IPTV becoming a possibility for the ILECs. Even the cell phone business is under attack by the rolling out of WiFi hot zones that are able to carry VoIP and the introduction of cell phones that will hunt for a WiFi network to connect to.
For years the ILECs have had complete protection in providing landline telephone and Advanced Data Services. The cell phone providers also enjoyed near complete protection of their revenues based on their network deployments and protected frequencies.

Those days are gone. ILECS are losing landline telephone at staggering rates. While DSL is still the most popular choice for broadband cable is quickly overtaking DSL with wireless just beginning to enter into the picture seriously. Advanced Data Services are also in decline as companies that used to have to get a T1 for connectivity now enjoy other methods. Even the cell phone companies are now under threat as citywide WiFi hotzones now offer a connection to a VoIP account through your brand new WiFi enabled cell phone. This one innovation threatens to gut the most profitable markets right out of the cell phone provider’s bottom line.

At the risk of stating the obvious, if the ILECs, cell phone providers and the cable companies see a sizable shrinkage in their revenues the money they are counting on to finance the next phase of their build outs isn’t going to materialize.

On the revenue side of the picture, the ILECs, cell providers and the cable companies make money from the following services; Telephone, (including cell phone) Television, PPV, Advanced Data Services and Internet. Some disruptive technologies are creating a crossing over into telephone for the cable companies (VoIP) with VoD, PPV and IPTV becoming a possibility for the ILECs.

For years the ILECs have had complete protection in providing landline telephone and Advanced Data Services. The cell phone providers also enjoyed near complete protection of their revenues based on their network deployments and protected frequencies.

Those days are gone. ILECS are losing landline telephone at staggering rates. While DSL is still the most popular choice for broadband cable is quickly overtaking DSL with wireless just beginning to enter into the picture seriously. Advanced Data Services are also in decline as companies that utilized a T1 for connectivity now enjoy other similar. Even the cell phone companies are now under threat as citywide WiFi hotzones now offer a connection to a VoIP account through your brand new WiFi enabled cell phone. This one innovation threatens to pull the most profitable markets right out of the cell phone provider’s bottom line.

At the risk of stating the obvious, if the ILECs, cell phone providers and the cable companies see a sizable shrinkage in their revenues the money they are counting on to finance the next phase of their build outs isn’t going to materialize.

Time Warner has just announced the introduction of their new VidiFone Eye-to-Eye Teleconferencing service that will be available to business class customers.

I wonder how long this will be before this becomes the “must have” toy for the home.

The VisiFone is the world’s first low-cost broadband videophone. It is a self-contained system that does not require a PC or any external equipment. The VisiFone operates on any broadband connection and home or office network including high-speed Internet connections via DSL or cable modem.

The VisiFone is H.323 or SIP compliant and delivers up to 30 frames per second video and crisp audio quality utilizing 128k to 512k of bandwidth. It is compatible with virtually all corporate video conferencing systems, yet at $599, the VisiFone can be used by the over 30 million broadband connected North American homes.

My concern is exactly what this will do to our bandwidth. At 128Kbps per stream this sucks up a T1 line pretty fast. Make that a 512Kbps stream and the typical T1 connected WISP is toast. Even if you have a large connection to the net, how many concurrent videoconferencing sessions can an 802.11B or even 802.11g access point take with any kind of QoS?

This is just another nail in the coffin based on the continuing stream of technological innovations that are going to put the run-of-the-mill WISP under in the next 18 to 36 months unless we all make some pretty serious changes.

Of course, change is nothing new to many WISPs as we all knew when we put up our networks we would be replacing them completely eventually. For some unknown reason, this seems to coincide perfectly with the day we finally finish paying for them.

Reuters has a great discussion about IPTV and what the near future might hold for anyone delivering IPTV services across their network.

As quoted in the article,

“In Washington, Federal Communications Commission Chairman Michael Powell said on Sept. 15 that almost every major U.S. phone company he has talked with is working to develop TVIP offering.

Consultancy Multimedia Research Group estimates there will be 15.6 million TVIP viewers by 2007, up from a few hundred thousand today.”

And as quoted from further down in the article,

“In Washington, Federal Communications Commission Chairman Michael Powell said on Sept. 15 that almost every major U.S. phone company he has talked with is working to develop TVIP offering.

Consultancy Multimedia Research Group estimates there will be 15.6 million TVIP viewers by 2007, up from a few hundred thousand today.”

So, what happens to our business models when each one of our customers starts demanding multiple 2Mbps stream of continuous bandwidth? This removes the oversubscription ratios that we have always been able to count on as for profit. As this technology rolls out we will need to be able to deliver 2Gigabits worth of connectivity for 100 users streaming IPTV and that is based on there only being one TV stream going in each household.

This is actually a two tiered problem for us because not only do our networks need to be capable of delivering huge amounts of bandwidth to the end user but also we will need to be able to profitably sustain a huge connection to the net.

This is what Verizon is releasing for press on their Fios service. Now, granted we will not be seeing this rolled out everywhere in Verizonland next year or even the year after. In fact, in many places I wonder if we will see this happening in any of our lifetimes. But the businessperson that does not keep careful track of what the competition is planning could be the employee of that very same competition in their near future.

I ran across this great article on ISP-Planet written by Dave Burstein (of DSLPrime.com) discussing the subject. Dave points out that the next generation of service from the ILEC is setting the bar at 30Mbps.

Where I see this as becoming an issue is that every single one of us depends on oversubscription as a calculation for determining profit. As Internet usage is bursty by nature we have been able to cram 100 +/- users on to a T1 pipe. However, as the more sophisticated user start to demand such services as IPTV, VoIP and videophone or video conferencing we will no longer be able to do that.

In fact, what good will an access point that can only deliver 70 Mbps be if we will only be able to service a couple of dozen users from it?

Internet Week has an interesting blip about what the “experts” are forecasting for the next three years.

As service providers we need to be able to correctly understand and plan for what our customers will be demanding from our networks. To date, we have been able to depend on the bursty nature of internet traffic but I believe this is about to change as VoIP and IPTV start to become the norm.

Many of us are already seeing the pressure of customers evaluating our service based on the promised speed alone. How many of us have heard “The Cable Company is promising me 4Mbps and you are providing me with less.” as a way to start off the telephone call? What’s worse is that most of us do not have the ability to provide enough bandwidth to the net to allow for dozens of concurrent IPTV streams along with several VoIP calls.

This is a going to develop into a very serious shortfall within the net couple of years (if it even takes that long) for may WISPs who are not looking at the bigger picture. (no pun intended)

Well, what are the possible solutions? WiMAX? Possibly, but in order for WiMAX to be a meaningful solution two things will have to happen. First, the Licensed Exempt WiMAX will have to be introduced into the market soon enough for us to deploy the technology ahead of this expected demand. Second, it will have to be adopted in such quantities that the scale of economics will drive the prices down to a level we all can tolerate.

Right now, the only other options that seem to be available are concentrating on building out a 5GHz “premium service” using some of the off-the-shelf hardware we have at our disposal. This may be an interim step as even these systems have a finite capacity for continuous streams. The other viable option might be MIMO (still too early to reliably say) as the aggregate throughput for the 2.4GHz equipment is advertised at 45Mbps. The 5GHz MIMO equipment claims to be able to push 200Mbps while still maintaining backwards compatibility with 802.11a/b/g devices.

On the good side, WISPs have a nearly flawless track record of finding inexpensive solutions when we need to. This may yet be one of our steepest challenges as we move from the “Internet Age” into an industry of connectivity.

Gone are the days where we could get by with providing only email and surfing.

Welcome to the next generation of communications.

Let’s look at the deployment planned for two cities, Philadelphia and Hong Kong.

As you all know Philadelphia has announced that they will be deploying a citywide WiFi network. In case you’ve been away vacationing in a cave here is a link to the Philadelphia story (apologies to Philip Barry)

To summarize this planned buildout, Philadelphia is planning to light up the entire city using WiFi which should deliver a shared 5-6Mbps of bandwidth. Not too shabby by our standards. With luck, in a year or two they will even be able to upgrade to WiMAX giving them the ability to deliver 20Mbps to the end user!

In contrast, Hong Kong has also decided to update their infrastructure by rolling out a brand new state-of-the-art network of their own. Here is a link to the story describing Hong Kong’s 10Gbps network.

The difference in scope is staggering. The economic advantage Hong Kong will have over Philadelphia is a level of magnitude above what we can even begin to understand.

Let’s examine some of the advantages Hong Kong will be able to leverage.

At 10Gbps every home and company that is connected will have a network that is superior to any business LAN we have in our country except for a very few. This means that the average employee in Hong Kong will be able to get up in the morning, log in and go to work – no commute, no time lost in commuting, no expense, less pollution and still have all of the infrastructure that the office could possibly provide. Included in this network is the ability to video conference, make and receive telephone calls, share files with coworkers and access the internet substantially better than anyone in this country.

Perhaps, more importantly, will be the benefit that this network brings to people in their off-work time. IPTV, Video on Demand, video conferencing and a flock of services we can’t even begin to guess at. Think of what might become available; telemedicine, real-time security, distance learning, companionship for the elderly and shut-ins, streaming music, streaming video and full screen webcam.

By contrast, the residents of Philadelphia will be able to surf the net and get their email at roughly the same speeds that DSL and Cable modems provide. This is not necessarily guaranteed as the speed is shared with anyone else that might be sharing that particular access point.

What does this mean to the average user in Philadelphia as opposed to Hong Kong?

Roughly, the same equivalent as one location having the fastest cable modem available while another location has 300 baud dialup connection.

This is an economic disadvantage that will be tough to overcome.

Go Philadelphia!

Normally, a news story like this would be rather depressing but I believe it signals a huge opportunity for WISPs based on our near complete failure as a country to roll out suitable broadband.

As quoted from the Emarketer article dated Sep 15, 2004,

“The FCC has two classifications of broadband connections: “high speed” connections are those featuring connectivity of 200 kilobytes per second (kbps) in at least one direction, while “advanced” connections offer connectivity of 200 kbps or greater in two directions. The FCC notes that subscribership to both has tripled between June 2001 to December 2003, which demonstrates that the use of broadband is growing. However, as Commissioner Michael J. Copps writes in his dissenting statement,

“In Japan, for as little as $10, consumers get broadband service at 8,000 kbps. In Korea, consumers get 10,000 kbps for the same price that we pay for 1,500 kbps. Consumers elsewhere get great prices for revolutionary speeds. Why, then, is the FCC still collecting data about 200 kbps service and calling it broadband? Our dated definition of broadband speed should have been dropped by the wayside long ago.”

In other words, while the US may be moving towards countrywide availability of “high-speed” or “advanced” connections, these standards set the bar so low that the US may achieve full availability and high numbers of subscribers, but lag other countries by great margins in terms of connection speed.”

The entire article can be found here:

http://tinyurl.com/5bzb7

So where is the opportunity?

Deploying better, faster connectivity before any of the other technologies can. If the Telco is looking to run Fiber to every home, we can surely beat them. The cable companies are also looking at connecting everyone with wire. Satellite? Right, can I have some more latency, please sir?And Broadband over Power Lines looks like it will be a non-starter.

If we are smart, plan carefully, push the manufacturers to deliver what we need quickly and deploy ahead of the competition, we could quite literally own a large chunk of the market. And this is key, if we grab the customers first and deliver reliable connectivity along with excellent customer service they will never leave.

That’s what I call opportunity!

Over the last few months you have all seen me from time to time post messages that deal with some of the unintended ramifications of what we are dutifully creating. There has been some interesting discussion about RFID and the potential abuse when it is applied to privacy issues.

Daily Wireless (awesome site by the way, if you’re not reading it) has a great story about using wireless in conjunction with traffic violation cameras.

http://www.dailywireless.org/2004/09/14/speed-violation-cameras/

As quoted from the article,

“Axsis LIVE allows the user to record violation event segments and replay them later for police or court purposes. The LIVE option is in addition to high resolution digital color still violation images. Any direction of travel can be viewed live or recorded video can be recalled later for court or police purposes.”

Okay, I can see where this could be a great thing.

Quoted further down in the article,

“Success, however, may not measured by the number of lives saved or accidents reduced but by the amount of revenue generated, according to speedcameras.org. Camera enforcement is all too often about power, authority, and money.

Beaverton, Oregon installed automated traffic violation cameras – and reduced the timing of the yellow caution light a few seconds. That made LOTS of money for the city – which denied it. A Portland television reporter showed them the evidence and government officials reset the yellow lights to standard timing.”

And I can see where abuse could creep in.

I am not trying to pass judgment here but rather cause us all to pause and reflect once in a while as to whether or not we are creating something that is for our own good. Will the networks we are building today enhance our lives as we all hope or will there be abuses that might make us wish we had never built this network?

I do not even pretend to have those answers but I do understand we should be looking at the fact that we may have reached a stage in human evolution where we are starting to innovate faster than we can comprehend the ramifications of what we are doing.

Food for thought.

Some of the news today is great – Americans are adopting broadband at records rates. According to a recent SlashDot article triple the amount of people are now using broadband compared to this time in 2001.

The other side of that story is that we now define broadband as being 200Kbps up and down. To me this borders on absurd.

I have a buddy of mine that runs a WISP and we have been having an ongoing debate as to what we really need to be rolling out. He is of the opinion that the Internet follows Morse’s law and that the base speed of the average Internet connection should double every 18 months.

This leap of logic defies all explanation in my opinion. Moore’s law has nothing to do with the Internet directly it was based on an observation that the speed of microprocessors seemed to be doubling every 18 months. For those of us that follow that progression there have been periods where that level has been exceeded and other times when it has progressed substantially more slowly. Regardless, applying Moore’s law to the speed of the average Internet connection to me is about as useful as applying Ohm’s law.

The question remains, where do we need to go and what benefit will we as a society see? At what point would building a network with a planned throughput of 5 Mbps be less cost effective than a network of 50 Mbps? More importantly, do we need 50 Mbps for the average residential user?

Let’s look at the potential.

The new buzzword in the industry is the triple play. That’s right, phone, video on demand and Internet all rolled together by one supplier. Why is this cool? It is because the revenue is there as is the business model. Let’s face it, just about every single home has a telephone connection (landline or otherwise) most homes have some form of television and roughly half of the American population has Internet connectivity.

That’s a pretty solid market to be going after.

There’s also quite a bit of money on the table here. For the sake of discussion I am going to assign values to each of the above services as they sit. For the average telephone customer I would expect to see a minimum of $40 to $50 per month. The average television subscriber is probably close to the same bracket. Add $30 to $40 per month in for high speed Internet and you are looking at anywhere from a low of $40/month all to $140/month and this is on the low end. Throw in pay per view, a larger than average long distance bill, homes with more than one telephone line to accommodate a teenager or two and you could quite easily double that amount.

This means that the average suburban street could yield a gross billing of well over $1K for every ten homes! You collect enough of those clusters of ten homes and you could really be talking about some serious money.

Let’s not forget the next generation of cell phones will also look at connecting to a WiFi network to use a VoIP connection allowing the convergence of cell phone, cordless home phones and cheap VoIP all under one WISPs umbrella.

But the fun doesn’t stop there. In fact, HDTV and DVD on demand will also garner some extra revenue. If you think that’s interesting, how about true full screen HDTV quality video phone? I believe justification for that service can be found by looking at any webcam site. People by the thousands are putting up with horrible resolution at six frames per second. Why? Simple, because they want video and they want it bad enough to put up with grainy pictures that are little more than a series of stills.

Well, if there’s a demand, why isn’t the Telco or the Cable co providing it? The answer I believe is very simple also – bandwidth. This application would take up a lot of it and they can’t supply it.

This is where the wireless people need to seize the moment and pull ahead. We have the technology, the ability and the necessary skills.

So, what’s stopping us? Simple, the price of GigE hardware.

But all of that is about to change and change very quickly. We are pushing the speed envelope to places I never thought we would be able to drive it to. The newer 5GHz MIMO technology boasts a raw data throughput of almost 600Mbps. Freescale (the Ultra Wide Band people) just announced they will push their chips to the 1Gbps mark in the next year. The beauty of both these technologies is that they will be mass produced and available to us cheaply.

Currently, UWB isn’t allowed for outdoor use but I am old enough to remember when the equipment we now use for WISP deployment wasn’t allowed for outdoor use either. I’m betting that once the FCC has enough data that UWB doesn’t disrupt narrowband technologies they will allow us to start using it.

Whether they do or not really doesn’t make a difference to me because MIMO will take us there in the meantime.

I see a day where the United States decides that we will match Korea and Japan in speed and infrastructure. A day where I can sit in my home office and connect to the corporate LAN at GigE speeds just like I was in the building. A day where I can video conference with anyone I choose, use a split screen to work collaboratively on a spreadsheet and listen to my choice of streaming music all without seriously impacting the rest of the families connection.

What’s better is I see that day being ushered in using wireless technology. I see us, the little guys being the ones to roll this infrastructure out. And I see it happening in the next couple of years.

Call me an optimist.

While I was doing my morning jog through the Internet news articles (I have to keep in shape some way) I was struck by all the articles about cities that are looking at rolling out wireless Internet coverage.

As with every other challenge a business faces this one also presents several opportunities. Let’s examine some of the facets of this situation paying particular attention to what this means to the WISP.

Let’s assume you are either running a WISP in one of these cities or that you are thinking of starting one. What would an announcement like this mean to you? Well, first of all, you’re going to have some competition. You did expect competition, didn’t you? In fact, there should be an entire section in your business plan detailing competition and how you effectively plan to deal with it, right? You do have a business plan, don’t you?

The second issue (and certainly related) is what is going to happen to “your” spectrum. This particular issue is going to be sticky as there is only a small slice of spectrum and now it’s going to be shared – by someone who might not be that willing to work with you. At the very least, there will now be less channels for you to work with.

Those of you who know me probably understand that I have been advocating proper design and deployment of any network for years. This means to me that every link should be constructed with the understanding that you will need plenty of margin. If you have had the luxury of an area all to yourself and now you don’t see the wisdom of this planning is probably now starting to hit home.

Let’s face it, the concept of a supercell now leaves you vulnerable to a microcell deployment being rolled out taking your network apart one neighborhood at a time. Ah well, proper planning…

Now, the question is, does this spell disaster for the well-prepared WISP? Not that I can see. Let’s look at some of the opportunities that this type of citywide WISP roll out brings to your table.

The biggest opportunity this immediately offers is the ability for you to distinguish your service from the “others” by highlighting your customer service, low latency, higher speeds, security or whatever else you offer that provides additional value to your customers.

There may also be an opportunity for you to work cooperatively with this new Municipal WISP to provide backhaul. Alternatively, maybe you could sell off part of your infrastructure as it is easier for them to buy your already functioning network than to build out one of their own. This might allow you the capital you would need to build out a different/better network.

Even if the city can roll out this type of infrastructure and service it reliably there are still going to be customers that will be willing to pay for a premium service, perhaps one that integrates computer service or service of all their office systems into one entity. If you can’t do this yourself, consider partnering with the local computer repair and office machine service company.

But most importantly, remember where we came from. At the most basic, WISPs are part of an old tradition that dates back to the beginning of civilization. We are innovators that look for a need, examine the options and invent a better way to service that need than any of the others that are currently available.

Well, what are the customer of today’s needs?
Where is the competition falling short on delivering an acceptable answer?

As WISPs (predominately WiFi based) we know the answers to these questions better than anyone else. Off the top of my head, I can see three distinct deficiencies that we all commonly share.

1.) Lack of a distinguishing speed difference between us and our competitors.
2.) No realistic way to deliver services any better than our competition.
3.) The inability to be able to quickly upgrade our networks without costing us an arm and a leg.

So, what should we do to address these three issues?

1.) Start planning your eventual upgrade right now! Whether you are looking to WiMAX, MIMO, FSO, Fiber or any other technology you NEED to have a plan, one that you can proudly point out to your customer as a reason they should do business with you.

2.) Identify the three main things your customers want and aren’t currently getting. Do they want VoIP support? How about video conferencing? How about remote backup? Would they be interested in having their internal networks monitored for virus problems? If you are specializing in the residential market, do your customers want Video on Demand?

3.) Where are we going? How will we get there? What technology will we be implementing to move our network forward? How will we finance this without eating away at all of our profits?

These are the real issues we must face sooner rather than later.

Respectfully,

Ken DiPietro
NextGenCommunications.net